P Corp Owns 800 Voting Common Shares Out of Q Corp

question 22

Multiple Choice

P Corp. owns 800 voting common shares out of Q Corp.'s 1,000 outstanding voting common shares, which it accounts for using the equity method. On December 31, 2018, the shareholder's equity section of Q Corp. was comprised of $15,000 in common shares and retained earnings with the amount of $450,000. Q Corp. reported net Income and paid dividends of $120,000 and $20,000 respectively for the year ended December 31, 2019.
There have been no goodwill impairment losses since acquisition.
On January 1, 2020, P Corp. sold 200 shares of its investment in Q Corp. for $125,000. On January 1, 2019, the investment account had a balance of $420,000. The acquisition differential was to be allocated as follows:
60% to patents (6 year remaining life) .
30% to equipment (9 year remaining life) .
What is the amount of Goodwill that arose from P's investment in Q?

• A) Nil
• B) $6,000
• C) $18,000
• D) $36,000

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Definitions:

Monocytes

A form of leukocyte crucial to the immune system, as it evolves into macrophages and dendritic cells.

Neutrophils

A type of white blood cell that helps the body fight infections by engulfing and destroying bacteria and fungi.

Agranulocyte

Nongranular leukocyte (monocyte or lymphocyte).

Eosinophil

A type of white blood cell involved in allergic reactions and fighting parasitic infections.